Savings grow at slower clipTotal money in savings accounts at commercial banks is growing at a slower rate as investors are struggling to find new investments due to low interest rates and the sluggish economy.
According to the Bank of Korea, savings accounts in the first half of the year amounted to 1,298.6 trillion won ($1.2 trillion).
The sum jumped 43.2 trillion won from the first to second halves of 2011, but only 28.8 trillion won in the first six months of 2012.
There were 146,000 accounts with deposits of more than 500 million won, up 8.5 percent from 134,000 won six months earlier.
The total sum of such large deposits approached 520 trillion won, up a mere 2.6 percent from the end of 2011. The previous six-month growth was 3.3 percent.
“Although such large-sum deposits are not used to evaluate economic conditions, the shrinking size of these deposits relates to anemic state of the economy and low interest rates,” said a BOK official.
Many investors have been looking for alternative destinations to park their money as the central bank is keeping a loose monetary policy. The domestic economy is expected to struggle until the first half of 2013.
The Bank of Korea said the interest rate on newly opened savings accounts was 3.08 percent in October, down 0.1 percentage point from September to mark a two-year low.
Meanwhile, the interest rate on new loans tumbled to its lowest point in 16 years at 4.98 percent.
Accounts with deposits of between 500 million won and 1 billion won accounted for 51.8 percent of huge savings accounts.
These were followed by accounts based on deposits of between 1 billion won and 2 billion won (21.7 percent), 2 billion won and 5 billion won (15 percent) and higher than 5 billion won (11.6 percent).
By Lee Ho-jeong [firstname.lastname@example.org]
More in Finance
Banks failed to tell borrowers they can demand rate cuts: FSS report
Stocks fall more than 1% as profit-taking continues
Profit-taking ends four-session winning streak for Kospi
Lottery sales hit record in the first half
Another recent high